Accor to Launch a Midscale Collection as Conversions Continue to Soar
Veranda High Resort Chiang Mai – MGallery. Having conquered the upscale tier, Accor is now going great guns to convert independent hotels in Asia into its midscale and luxury collections. Photos: Accor
Accor’s senior vice president development South-east Asia, Japan and Korea, Andrew Langdon, sees lots of unbranded hotels that are more suitable for collections than classic brands.
By Raini Hamdi, 11 March 2022
Accor will introduce a midscale collection later in the year, which will bolster its stack of soft brands. The move comes as conversions of independent hotels continue to rise strongly, including in Asia.
The chain’s focus has been more on lifestyle than collections or so-called “soft brands” (see how the dots connect to make Accor the heavyweight in lifestyle in this Hotels-Asia article). But this is changing as the pandemic pushes south demand by independent owners for the safe haven of a brand association and distribution.
Last November, Accor introduced Emblems Collection, its first soft brand addition in 13 years. Emblems is aimed at the luxury segment, covering heritage, retreat and design-led hotels. This doesn’t cannibalize its MGallery Hotel Collection, launched in 2008 and targeted at upscale boutique hotels.
What’s missing is the soon-to-be-introduced midscale collection.
Full details are still under wraps but a Hotels-Asia interview with Andrew Langdon, Accor’s senior vice president development South-east Asia, Japan and Korea, shows that a key Accor strategy to expand further in Asia-Pacific, excluding China, is to cast the net wider to independent hotels through collections, either under management or franchise contract.
Langdon, a veteran hotel developer, said he’s never seen so much demand by owners of unbranded hotels to join chains as in the past two years. “This will only increase. Having experienced the impact of Covid-19, these owners realize the benefits that brands and distribution can bring. And we see collection brands as being more suited to their needs than classic brands that have the same DNA, look and feel,” said Langdon.
Independent hotels are individualistic by nature. By joining a collection, owners need not spend on Capex to fit their round peg into the square hole of a traditional hotel brand. Nor do they want to, since they are keen to retain their property’s unique identity.
On the other hand, guests are also looking for more individual than cookie-cutter products.
“So we’re responding to market demand by bringing luxury, upscale and midscale collections to independent owners, and hotel guests,” said Langdon.
Hugely Unbranded
In South-east Asia alone, more than 80 percent of nearly 8,800 international-standard hotels in operation are independent, according to STR, as cited by C9 Hotelworks in a review of independent hotels in the region dated November 2020.
According to the Thai hotel consultancy firm, the five South-east Asian countries with the most number of independent hotels are Vietnam, Indonesia, Philippines, Malaysia and Thailand, in that order. But though Thailand has the least number of independent hotels of the five, the study shows independent owners there have the biggest appetite to join chains.
Collection rebrandings specifically have been mainly in the upper upscale (54 percent) and upscale (24 percent) tiers.
Interestingly, the leading collection brand in South-east Asia as at November 2020 was Accor’s MGallery, with 35 hotels in operation and pipeline, the study shows. This reflects the potential for Accor to drive more conversions, now that it has the luxury Emblems and the imminent midscale collection.
Owners can even join Emblems under a franchise agreement — the only luxury Accor brand that the chain is prepared to franchise. Accor is also open to franchise the upscale MGallery, although most of the 100-plus hotels in the collection globally are management contracts, said Langdon.
Room for Franchising
Currently, only 10 percent of the portfolio in Asia (excluding China and the Pacific) are franchises, said Langdon.
“We aim to double our franchises in Asia over time,” he said. “Franchising is growing a lot, but it’s still a minority in Asia. The ratio [to management contracts] is far higher in Europe and North America.”
Apart from collections, Accor has also identified key legacy brands for conversions, either under management or franchise. These include Ibis, Ibis Styles, Mercure and Grand Mercure, which aren’t as standardized as, say, its Novotel brand. It will also be bringing the Mantra brand into Asia for conversions.
“But we do see lots of unbranded hotels that are more suitable for a collection than one of the classic brands, due to their design and style. And the owners tend to want to continue to manage the hotels themselves and prefer a franchise to management,” said Langdon.
Fees under franchise can work out to be 30 percent less than management. It’s a win-win as it’s “less of a headache” for both owners and operators, he said.
“A franchise provides owners the use of the operator’s brand, distribution and policies and procedures. Owners are responsible for the daily operation of their hotels. A management contract puts a lot of demand on corporate staff to support the hotel.”
Not Plain Sailing
But it’s not all plain sailing. Langdon admits that in the last few years since Accor became more open to franchising, it realized that owners don’t necessarily understand the difference between a franchise and management.
This is especially true of existing owners whose management contracts ended and switched to a franchise. “We have a number of examples of owners who are on franchise but are still expecting HMA [hotel management agreement] support. One of our biggest issues is to help them understand and accept the difference,” said Langdon.
Meanwhile, Langdon also admits that growing Ennismore – Accor’s new lifestyle platform that offers 14 brands including SLS and Mondrian – in the region will need some time. “We see a lot of opportunities for lifestyle in Asia, but owners are cautious. In Asia lifestyle is new whereas in the West demand for lifestyle is off the charts. It started in North America; they [owners] get it and see the benefits it brings. But this will come to Asia.”
Accor’s strategy is to work on a few key lifestyle flagship hotels in the region, such as the Mondrian in Singapore, “so that the market can touch, feel and see their performance”.
“Then growth will come,” said Langdon.
– This article is third in a series focusing on Western chains’ expansion in Asia-Pacific excluding China, in no particular order of chains. Up next: IHG. Previous:
• Hilton Sees 2022 as the Year it Seizes Growth in Asia-Pacific Beyond China
• Marriott Ties With Accor for top Spot in Hotel Signings and Openings 2021
